Question

Monthly production costs in Dilts Company for two levels of production are as follows.

Cost 2,000
Units 4,000 Units
Indirect labor $10,000, $20,000
Supervisory salaries 5,000, 5,000
Maintenance 4,000, 6,000
Indicate which costs are variable, fixed, and mixed, and give the reason for each answer.

Answer 1

In Dilts Company, indirect labor and supervisory salaries are fixed costs while maintenance is a variable cost. There are no mixed costs in this scenario.

Step-by-step explanation:

The fixed costs in Dilts Company are indirect labor and supervisory salaries because they do not change with different levels of production.

The variable costs are maintenance because it increases as the production level increases. The reason for this is that maintenance is directly tied to the number of units produced.

There are no mixed costs in this scenario since mixed costs are a combination of fixed and variable costs.